Karn/Weadock Generating Complex Expansion

Consumers Energy, a subsidiary of CMS Energy, has proposed a new coal-fired plant at an existing 2,101 megawatt (MW) complex that includes 821 MW of coal-fired capacity (the Weadock Generating Plant and the Karn Generating Plant) and 1,276 MW of natural gas and oil fueled capacity. Consumers Energy would use 500 MW from the plant, with the remaining 300 MW allocated to unannounced co-owners (probably Michigan municipal power entities). According to the company, the project requires the removal of a number of “key hurdles,” including repeal of Michigan’s electric deregulation law.

It was announced on May 27, 2009, that CMS Energy was deferring, not canceling, the plant because of "reduced customer demand for electricity due to the recession, forecasted lower natural gas prices due to recent developments in shale gas recovery technology, and projected surplus generating capacity in the Midwest market." As a result the plant is currently on hold.

In late December, 2009, the Michigan Department of Environmental Quality approved the "permit to install" for the facility.

=May 2010: Consumer's Energy announces delay in Karn Construction=

On May 25, 2010, CMS Energy announced that the Karn project will be delayed, due to changes in the marketplace, reduced projections of energy demand, and lower prices of Natural Gas. According to the Jackson Citizen-Patriot, Consumer's home town paper, the move is a temporary one, and the Karn plant still figures prominently in Consumer's Energy plans.

After taking a week to digest the news, The Bay City Times accepted the fact that Michigan's power demand did not warrant a new multibillion dollar complex. In their response, the editors expressed hope that the plant was down, but not out, and might be revived in the future.

The editors noted that, "With millions of gallons of oil now gushing into the Gulf of Mexico from the BP oil well catastrophe, just weeks after a coal mine disaster in West Virginia that killed dozens, our nation’s ambivalence toward the old-fashioned energy sources of “black gold” has never run deeper", and counseled that Bay City and the Saginaw Valley should "seize the moment", and determine to lead in the wind and solar industry.

As reactions set in, The Detroit Free Press published a point/counter point discussion, between Marty Kushler, director of the utilities program for the American Council for an Energy-Efficient Economy, and Wayne Schmidt, a Republican state representative from Traverse City.

Early press reports here:

Bay City Times news report

Bay City Times editorial response

Consumers will accelerate investment in wind farms

Detroit News Account

Associated Press

Crain's Detroit Business

Saginaw News

WNEM News

Michigan Radio

Midland Daily News

Reactions from Around the State

CMS Energy Press release

=Regulatory Hurdles= In late December, 2009, the Michigan Department of Environmental Quality approved the "permit to install" for the facility.

According to the Detroit Free Press, "The move to approve the 830 megawatt plant in Hampton Township had Consumers Energy rejoicing, but environmentalists lambasting the decision." “This permit moves our project a step closer to creating badly need jobs and boosting the state’s economy,” said John Russell, Consumers’ president and chief operating officer, according to the Free Press.

Anne Woiwode, the director of the Sierra Club’s Michigan chapter, told the paper, “Building a coal plant Michigan doesn’t need near Bay City will saddle ratepayers with terrible costs and waste investors’ money”.

A number of questions remain to be answered before work might begin on the project. Consumer's Energy outlined the process that must be followed to make the plan a reality. "Whether we end up building a coal plant or don't … we don't think it has a dramatic impact on our future plans," Consumer's chairman Davdi Joos told the Jackson Citizen Patriot.

The permit calls for Consumer's to close five older units following the operation of the new plant, and two additional units depending on customer need. 5 older units on completion of the new plant, and two more depending on electical demand.

According to the Detroit News, "The $2 billion project is expected to create 1,800 construction jobs and more than 100 permanent jobs after the start of operation in 2017." The News article pointed out that "Consumers Energy still has to win approval from the Michigan Public Service Commission to begin construction on the plant. The utility must file for a certificate of necessity, which it hopes to do in 2010. The project will then undergo a much more rigorous hearing process in which the public will have a chance to weigh in and state energy regulators scrutinize the plan, including the effect closing older coal-fired plants will have on emissions..."

State Senator Jim Barcia, and Rep. Jeff Mayes, both Democrats, of Bay City, hailed the decision. "I'm very excited that the Karn-Weadock expansion is back on track," said Mayes, Chair of the House Energy and Technology Committee. "Senator Barcia and I have worked hard to restart this process because businesses are looking for certainty when it comes to making major investments. Now that the DEQ is ready to move forward, we're one step closer to creating thousands of jobs for our community."

The Detroit News published editorials urging that the plant be built on January 2, and again on January 26. The Bay City Times also weighed in in favor of the plant.

Environmentalists questioned whether ratepayers should be saddled with the costs of the new facility during a recession, and a coaliton of citizen's groups announced in February 2010 that the fight was "far from over."

Various strategies are being developed, but the coalition of environmental groups said that Consumers Energy still has a high hurdle to cross in proving that the plant is needed. A so called "Certificate of Need" proceeding before the state Public Service Commission is scheduled to begin in late summer, and citizens will be invited to submit comments on the project.

As if to underline citizen's concerns, Consumer's warned investors that new regulations could effect costs on the Karn project.

According to an article in the Michigan Messenger "in a conference call with investors the company acknowledged serious legal and regulatory obstacles to the development of it’s proposed new 830 megawatt plant planned for the Karn/Weadock complex."

State and National
• Michigan Liberal • Washington Post • State Rep Jeff Mayes, and Senator Jim Barcia

Michigan Public Service Commission - No need for Karn Plant
September 8, 2009, the Michigan Public Service Commission (PSC), the body which regulates utility rates, expenditures and profits, has released an evaluation of Consumer Energy's proposed Karn-Weadock expansion.

The PSC staff wrote that Consumer's had not established the need for the new power plant.

The PSC wrote:
 * "Consumers Energy’s long-term capacity need is unjustified without the explicit retirement of existing coal capacity in its baseload generation fleet. Given Consumers Energy’s load growth assumption of approximately 0.3% per year, coupled with anticipated effects of energy efficiency and demand reduction initiatives, the longterm projected capacity need before the assumed expiration of the Palisades Purchase Power Agreement (PPA) in 2022 is based primarily on assumed retirement of approximately 950 MW of existing coal capacity."


 * "Staff notes that the proposed ASCPC plant is one alternative out of a range of alternatives that may be used to fill the projected capacity need. Other alternatives that may fill all or portions of the projected capacity need include; energy efficiency and load management; renewable resources; or a combination of a number of alternatives that could include lesser amounts of purchased power."


 * "Consumers Energy’s long-term capacity need is unjustified with the explicit retirement of existing coal capacity in its baseload generation fleet," the staff report said.

Jeff Holyfield, Consumers’ director of news and information, said the Jackson-based utility is “very disappointed with the conclusion of the staff report, and frankly, we disagree with the conclusion.

The order directs the PSC to give technical assistance to the Michigan Department of Natural Resources, the agency charged with issuing permits authorizing construction of new plants. The two agencies decided in April that the PSC would give assistance as needed and spearhead the evaluation of applicants' alternatives analysis, reporting back to the DNR.

The report is one piece of a large review under way by the Michigan Public Service Commission and the Michigan Department of Environmental Quality. The report now goes to the DEQ and will be taken under consideration when the state agency decides on whether to issue air quality permits for the plant, as well as for another proposed plant in Rogers City, MI.

The utility is still reviewing the decision. "We're very disappointed by this staff report," said Consumers public information director Dan Bishop. "We'll be reviewing it, we'll be evaluating our options."

Additional Media stories:

WILX.COM Livingston Daily Marquette TV6

Statewide Opposition Regroups
Citizen's groups around the state have coalesced around a multi pronged approach to opposing the Karn expansion. A number of activities including a petition drive and a video contest are in progress as of early 2010. In addition, several groups are planning more traditional challenges within the regulatory structure.

The California based group As You Sow will sponsor a stockholder resolution at the stockholder meeting in early march. Shocked by a billion gallon spill of toxic coal ash at a TVA facility in late 2008, citizen's groups have asked for closer monitoring of the material, which some fear may be leaching into water supplies. According to The Michigan Messenger, Consumers has only said that they are considering the request at this time.

Many in the opposition said that building a new coal plant at a time when the country is moving toward a renewable economy is a bad idea. “For coal burning, outside of Texas, we are the only state that has an investor-owned utility proposing a new coal plant, so we really are at ground zero [of the environmental fight],” said Tiffany Hartung, of the Sierra Club Michigan Chapter. “To have this many proposed coal plants in a state that does not produce any coal at all just doesn't make any sense.”

Another approach will be to challenge the economic necessity for the plant at a "Certificate of Need" proceeding before the Michigan Public Service Commission which will commence in August, 2010. The National Resources Defense Council has announced that it will challenge the utility's assumptions on cost and demand for this plant at that proceeding. The group has issued a study which questioned the need for the plant. According to Rebecca Stanfield, an attorney in the group's Chicago office, "This is definitely far from over."

In late March, 2010, the National Resources Defense Council filed a lawsuit questioning the need for the plant. The National Resource Defense Council's attorney, Shannon Fisk, told the Bay City Times, “We believe that the DNRE failed to evaluate cleaner energy alternatives to the proposed coal plant in an objective way and failed to set the stringent emission limits on the coal plant that are required by the Clean Air Act,”. The groups say that the state is not requiring the "Best Available Control technology" for pollutants. Local officials were critical of environmentalists, who are seen as holding up economic progress and jobs.

Mayes Targeted
State Rep. Jeff Mayes, a democrat representing Bay City, has been spotlighted by the League of Conservation Voters for his outspoken support of the Karn-Weadock expansion. The group has launched a website, eyeonmayes.com to track Rep. Mayes voting record on Environmental Issues. According to the Bay City Times,"besides the Web site, members of (LCV) will be making phone calls and knocking on doors, urging people to ask Mayes to improve his voting record."

"He has a pretty good record" on issues like protecting the Great Lakes from Asian carp and preserving coastlines, Duggan said. "But, unfortunately, it's getting worse," with support of constructing new coal plants at a time when the Michigan Public Service Commission has said they're not needed."

Economics of New Coal Plant Questioned
A new report commissioned by the Sierra Club and the Natural Resources Defense Council was released on April 8, 2010, questioning the Consumer's Energy coal plan on economic grounds.

In a press release, the Michigan Sierra Club announced, "Ratepayers will be forced to pay significantly more money on their energy bills if Consumers Energy builds a new coal plant in Bay City that regulators say is not needed and which thousands of citizens have opposed for years".

The report's author is Tom Sanzillo, a former assistant Comptroller of the State of New York, and currently a senior associate with T.R. Rose Associates of New York City. According to Mr. Sanzillo, ”With the introduction of new energy markets that have developed over the last five to ten years, coal has become less competitive and a riskier investment, ..this report shows that if the Karn-Weadock plant is built, ratepayers will see an increase in their electric bills well beyond what is considered within the normal bounds of typical increases in Michigan.”

The report predicts that ratepayers will see price rises of an additional $33 per year, on top of their 'normal" rate increases of 4 or 5 percent, meaning rates will rise by 70 or more dollars per year for the average consumer.

Background
Consumers Energy filed an application with the Securites and Exchange Commission in September 2007, and with the Michigan Department of Environmental Quality in October.

On Nov. 26, the Hampton Township Board of Trustees approved a $10 million tax break for the project. Consumers held a public hearing on Nov. 27, at which both supporters and opponents of the project expressed their viewpoints.

Opposition is being led by Clean Energy Now, a coalition of Michigan environmental groups.

Opposition groups face powerful momentum the project has generated with local union groups. In September 2008, the Bay City Times editorialized in favor of the new plant.

The large number of pending coal-fired power plant proposals in Michigan have delayed the state's Department of Environmental Quality in processing Consumers Energy's application for an Air Quality permit. The DEQ expects the review to last into 2009, with a public comment period extended from the standard 30 days to 60 days because of concern from state and national environmental groups.

Michigan's new energy legislation is seen by many local observers as favorable to the development of the new plant in the Bay City area.

The Lone Tree Council, a Bay City area environmental group, uncovered information that two massive ash landfills holding the concentrated residue of coal burned at a power plant in Bay County have been leaking toxics to the Saginaw Bay for years. The group discovered the issue while combing through state records on plans for a new 800-megawatt power plant at the Consumers Energy Karn-Weadock facility in Hampton Township. The investigation continues to turn up more evidence of toxic release.

In October 2007, Consumers Energy filed its air permit application with the Michigan DEQ. In July 2008, Consumers Energy turned in their second draft of MACT determinations after the first version was rejected. Consumer's has now also filed an analysis of energy alternatives. Environmentalists immediately criticized the document. "It looks like they're trying to justify a plant we don't need," according to David Gard, an energy expert for the Michigan Environmental Council.

In November, 2009, a statewide petition by ratepayers and environmental groups asked Consumer's Energy to drop plans for the plant.

Stormy Public Hearing Process
On April 14th and 15th, 2009, a Department of Environmental Quality, (DEQ) panel heard arguments for and against the proposed Karn/Weadock Coal plant expansion. The event was preceded by a highly publicized ramping up on the part of proponents and opponents of the project. Bay City reps Jeff Mayes, and James Barcia, both Democrats, fell in line with labor unions in support of the plant, and the promised 1800 constrution jobs it might bring to the hard hit region. The Bay City Times quoted Barcia saying, "Obviously, Jeff and I are pleased the process is back on track," Barcia said. "We can't afford to wait a minute to create jobs and to provide new energy." The Bay City Times editorialized in support of the Weadock expansion

After months gearing up for what will be an epic statewide battle, including an informational session on March 26, , the process has now begun in earnest.

For activists and interested parties, Documents relevant to the Consumer's Energy permit process are online.

DEQ process begins Acrimoniously




Citizens questioned the objectivity of news reports that begin by describing the project as a "clean coal" plant.

Some Television coverage attempted to give both sides. None of the TV pictures captured the loud, acrimonious, and even intoxicated behavior among the Power Plant proponents.

This portion of the DEQ hearing process was intended to solicit community input into the Air Quality determination of the DEQ. Technically, only comments on actual air quality issues were to be considered as relevant, but almost none of the commenters restricted their statements to those issues.

The process, instead, became a forum and a bit of a theatrical exercise, to see who could turn out the biggest, and loudest crowd. Clearly, local unions had been very active in promoting attendance among their members, and were the largest contingent.

An impressive number of local individuals, however, rose to speak against the project. The process took place over two days, in a conference room at the Bay Valley Golf and Country club, a location that may not have been ideal because the liquor served on the premises may have fueled some of the excesses of the first day's proceedings. Witnesses described the smell of alcohol very much in evidence. Women in the audience, in particular, reported being intimidated, and many felt the need to be escorted to their cars. A number of "anti" coal attendees, intimidated by the crowd, decided against speaking at all.

The second day's event was somewhat quieter, as the "pro coal" crowd may have been somewhat chastened by negative media coverage. Significantly, on the second day, a large contingent of student activists arrived in several buses, and attended a boisterous rally preceding the hearing.

The process is nowhere near completed, and observers expect more acrimony, and even lawsuits, before the plant construction begins, if ever.

Project Details
Sponsor: Consumers Energy (CMS Energy) Location: Bay City, Bay County, Michigan Capacity: 800 MW Type: Supercritical pulverized coal Projected in service: 2017 Status: On hold

Citizen Groups

 * Clean Energy Now
 * Environment Michigan, info [at] environmentmichigan.org
 * Lone Tree Council, terbar [at] charter.net
 * Michigan Sierra Club, gayle.miller [at] sierraclub.org
 * Michigan Clean Water Action, elansingcwa [at] cleanwater.org

Related SourceWatch Articles

 * Michigan and coal
 * Karn Generating Plant
 * Weadock Generating Plant
 * United States and coal
 * Carbon Capture and Storage
 * Existing U.S. Coal Plants
 * US proposed coal plants (both active and cancelled)
 * Coal plants cancelled in 2010
 * State-by-state guide to information on coal in the United States (or click on the map)